Sale Price, Marketing Time, and Limited Service Listings: The Influence of Home Value and Market Conditions

Local markets for real estate brokerage services typically exhibit fairly strict pricing. Increased popularity of limited service brokerages provides an opportunity to study any loss in utility by sellers using these firms. Anecdotal evidence suggests that sellers experience a decreased selling price or an increased marketing time when utilizing limited service brokers, but there has been little prior empirical work. This study finds that limited service listings sell for significantly more and spend significantly less time on the market than traditional listings. The price and marketing time impacts vary by home value and local market conditions.

Cultural Influnces on Risk Tolerance and Portfolio Creation

We extend existing research that examines the impact of culture on risk tolerance. Using surveys completed by Chinese and American students, we find, consistent with previous studies, that Chinese students perceive themselves as more risk tolerant. However, we find that Chinese students are less consistent in matching their perceived tolerance levels with actual scores from a standard risk tolerance assessment. Further, we also examine mock portfolios created by the respondents and find no evidence that Chinese students create portfolios that are riskier than their American counterparts. Our findings suggest that differences in risk tolerance are at least partially a product of culture, but such differences may not always translate into actual investment decisions

Seasonal Affective Disorder and the Pricing of IPOs

Purpose - It has been found that stock market returns vary seasonally with the amount of daylight, and they attribute this effect to seasonal affective disorder (SAD), which is a psychological condition that causes depression and heightened risk aversion during the fall and winter months. The goal of this study is to examine whether this effect also manifests itself in the pricing of initial public offerings (IPOs). Design/methodology/approach - The authors conduct an empirical analysis on IPO data collected over the period 1986-2000. Specifically, we examine potential pricing differences between IPO that go public during the fall and winter months, relative to other issues. The paper begins by exploring differences on a univariate basis (i.e. testing via t-statistics), subsequently extending the analysis by controlling for firm and offer characteristics in a multiple regression framework. Findings - The paper finds that IPOs experience higher levels of underpricing in both the fall and winter months and that offer price revisions are higher during the winter months. Both of these results are consistent with SAD influencing the IPO pricing process. Originality/value - The results suggest that behavioral issues (i.e. the emotions of buyers) may have as much of an effect on the pricing of IPOs as more traditional characteristics. Further, the results imply that firms with flexible issuance schedules should avoid going public during months affected by SAD, thereby potentially reducing the cost of issuance

Further Examination of Equity Returns and Seasonal Depression

Seasonal Affective Disorder (SAD) induces investors to shift resources away from risky investments (such as equity) and towards safer alternatives (such as fixed income) during the Fall, while stimulating the opposite action in the Winter. Existing studies, however, fail to account for the possibility that SAD could further motivate investors to shift exposure among different subsets of equity, rather than simply across broad asset categories. We explore this possibility by examining the impact of SAD on the returns of “safe” and “risky” equity sectors (i.e., industries), as well as on equity at different levels of market capitalization. We find the SAD effect to be generally prevalent throughout all equity sectors, regardless of historical or perceived risk level, implying that there is no incremental sector reallocation. We do, however, find that SAD has a more significant impact on smaller capitalization stocks, suggesting that investors view large capitalization stocks as relatively safe investments

Market Efficiency at the Derby: A Real Horse Race

Using race data from each Kentucky Derby from 1920 to 2005, we examine whether the horse wagering market is efficient. Most prior studies in this arena test potential betting strategies that rely on posted odds, generally finding that it is extremely difficult to devise and implement any consistently successful wager (i.e., market efficiency). We extend these studies by examining underlying determinants of posted race odds, specifically focusing on the experience of auxiliary members (e.g., jockey, breeder and trainer) associated with each entrant. We find that past Derby experience is an important determinant of posted odds and that the odds-making system appears to capture relevant experience, as using this data provides no incremental information for forming marketbeating wagers. Thus, we provide additional evidence supporting efficiency in horse race betting markets

The Influence of Simulation Performance on Student Interest

Previous studies examine the potential benefits of using classroom games and simulations, finding that their use generally increases knowledge and interest level. However, few (if any) of these studies examine whether performance in such simulations is relevant to these outcomes. Particularly in investments, where trading simulations are common, the performance relative to peers and the market can be objectively determined based on portfolio return. Thus, we extend the existing literature by studying the impact of portfolio performance on knowledge level and interest in the profession. We find that simulation performance has no significant influence on the students\u27 feelings with regard to their knowledge attainment or their level of interest in the discipline. This non-result is actually particularly meaningful, as some professors have either not used simulations or have avoided in-class performance comparisons for fear that a poor performance will persuade students to avoid a career in the field. Our results suggest that such fear is unwarranted

Bank marketing investments and bank performance

Purpose – The purpose of this paper is to examine empirically the effects of investments by US banks in advertising and promotion on their performance in the areas of profits and market share. Design/methodology/approach – The model presented in the paper is motivated by the theory of the profit function. We estimate a base model with a fixed-effects panel including an AR(1) disturbance over the period 2002-2006. To test for selection bias, we also estimate a Heckman model. Findings – It is found that bank profits and market share increase significantly with increased spending on advertising and promotion. Also, significant evidence is found of increasing returns to scale in this type of marketing expenditure. It is also found that increased expenditures on branching result in higher profits and increased market share, but without scale effects. The results are robust, the inclusion of variables is not suggested by profit function theory and corrected for prospective selection bias. Originality/value – The extant literature does not include research on the effectiveness of bank marketing from the viewpoint of its impact on profit performance. The findings should be of interest to academics in finance and marketing and to banking practitioners.Advertising, Banks, Market share, Profits